2015 (3) TMI 137 - AT - Service Tax

Tribunal Decision: Input Service Credit Allowed, Except for Employee Insurance

The Tribunal allowed input service credit on various services utilized by the appellant, except for insurance cover for employees and their dependents. ... Denial of input service credit - benefit under Rule 2(l) of the Cenvat Credit Rules, 2004 - Held that:- The reliance of Maruti Suzuki (2009 (8) TMI 14 - SUPREME COURT) by the learned A.R. has no relevance to the facts of the appeals in question as in the case of Maruti Suzuki Ltd. (supra), CENVT credit is available on 'inputs' and here we are discussing about the 'input services'. However, I find that the insurance cover on employees and on their dependents have no relation to the business activity of the appellant. Therefore, I do agree with the contention of the learned A.R. that the credit availed on the service tax paid on the 'insurance service' is not admissible. For the rest of the services, I hold that the appellant is entitled for input service credit as per the judgment of the Ultra Tech Cement Ltd. Accordingly, I allow input service credit on all the services availed by the appellant in the course of manufacture except on insurance cover on the employees and on their dependents. - Decided in favour of assessee. Issues:1. Denial of input service credit on various services under Rule 2(l) of the Cenvat Credit Rules, 2004.Analysis:The appellant appealed against the impugned order denying input service credit on services including running and maintenance of barges and tugs, insurance services, horticultural services, and canteen services. The appellant contended that all these services were utilized in their business activities as a manufacturer of excisable goods, citing the decision of the Hon'ble High Court of Bombay in the case of Ultra Tech Cement Ltd. The appellant had reversed the service tax amount on subsidized food provided through canteen services. On the contrary, the learned A.R. argued against the appellant's entitlement to input service credit, referring to the judgment of the Hon'ble Supreme Court in the case of Maruti Suzuki Ltd. v. CCE, Delhi. The A.R. specifically highlighted the insurance cover taken for employees and their dependents, asserting that it did not relate to the manufacture of final products and thus, the credit availed on insurance services was not admissible.The Tribunal considered the arguments presented by both sides. It distinguished the case of Maruti Suzuki Ltd., emphasizing that it pertained to 'inputs' and not 'input services' as in the present appeals. Regarding the insurance cover for employees and their dependents, the Tribunal concurred with the A.R.'s stance that it lacked relevance to the appellant's business activities, thereby disallowing the credit on insurance services. However, for the other services, the Tribunal aligned with the appellant's position, relying on the Ultra Tech Cement Ltd. judgment, and allowed input service credit on all services except insurance cover for employees and their dependents. Consequently, the appeals were disposed of accordingly.